Comparison of 2 Portfolios: Undiversified and Diversified Among Industries of Kazakhstan.

The extracted data used includes monthly returns from January 1972 to July 2011. The assets are selected so that the portfolio contains the largest, most liquid, and most tradable assets. The choice of such a variety of assets across several markets was used in order to generate a large cross sectional dispersion in average return. It helped to reveal new factor exposure and define a general framework of the correlated value and momentum effects in various asset classes.

Advisors and investors would do well to pay as much attention to the expected volatility of any portfolio or investment as they do to anticipated returns. Moreover, all things being equal, a new investment should only be added to a portfolio when it either reduces the expected risk for a targeted level of returns, or when it boosts expected portfolio returns without adding additional risk, as measured by the expected standard deviation of those returns. Lesson 2: Don’t assume bonds or international stocks offer adequate portfolio diversification. As the world’s financial markets become more closely correlated, bonds and foreign stocks may not provide adequate portfolio diversification. Instead, advisors may want to recommend that suitable investors add modest exposure to nontraditional investments such as hedge funds, private equity and real assets. Such exposure may bolster portfolio returns, while reducing overall risk, depending on how it is structured. Lesson 3: Be disciplined in adhering to asset allocation targets. The long-term benefits of portfolio diversification will only be realized if investors are disciplined in adhering to asset allocation guidelines. For this reason, it is recommended that advisors regularly revisit portfolio allocations and rebalance

“The Benefits of diversification are clear. Portfolio theory has played a crucial role in explaining the relationship between risk and return where more than one investment is held. It also enables us to identify optimal and efficient portfolios.”

The methods used to obtain these results were: From this text of the article I conclude that the

The project is based on analyzing the 40 scrip’s and preparing a portfolio of 20 scrip’s and evaluates the performance of portfolio for the next one year. The sample size is 40 companies stocks. The company stocks are chosen based on their nature 1) Aggressive in nature (β>1).2) Conservative in nature (β<1) and 3).Balanced in nature (β=1).The portfolio performance is compared with various mutual funds and with market to pullout or adds some companies according to their performances. The virtual money investing in the portfolio is 100 Crores.

Moreover, once SMB and HML are defined, the corresponding coefficients bs and bv are determined by linear regressions and can take negative values as well as positive values. The signs of the coefficients suggested that small cap and value portfolios have higher expected returns and arguably higher expected risk than those of large cap and growth portfolios.

To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results. The Single Index model (SIM) and the Capital Asset Pricing Model (CAPM) are such models used to calculate the optimum portfolio.

51). In the Citation Analysis Study, researchers collected data from the published works of the Principal Investigators to be analyzed for their influence.

diversification benefits from emerging equity markets are sensitive to the time periods of the tests, and in some cases, to the particular investment vehicle. There are similar diversification benefits accruing to direct exposure to emerging market indexes, managed funds and ADR portfolios. Their findings confirm that ADRs are useful for international diversification purpose.

In a summary of this report, I have introduced the basic information about this portfolio, which includes ten stocks and two bonds, then I have gone on to analyse the past performance of the existing portfolio, which includes the dividend yield, sectors and payout ratio. From this analysis I have found

“The concept of efficient diversification implies that for an investor wishing to efficiently assume risk in their portfolio; the risky part of the portfolio should consist of weighted proportions of all possible risky assets.”

Active investments – A portfolio structure based on share analysis, new information and risk/return preferences (fundamental and technical analysis to support investment decisions)

Interest rates, recession and wars all represent sources of systematic risk because they affect the entire market and cannot be avoided through diversification. Whereas this type of risk affects a broad range of securities, unsystematic risk affects a very specific group of securities or an individual security. Systematic risk can be mitigated only by being hedged.

According to Rosvall & Bohlin (2014:1), risk is the price of opportunities provided by the stock market for investors. If investors would like to minimize risks of stock trading process, the portfolio investments are vital to be concentrated on (Anghelache & Anghelache, 2014:8). Besides, Goetzmann & Kumar (2008:433) also stated that portfolio investment is a great choice for investors to eliminate risk.

As a result, many different factors have been tested across different markets. Historically, most studies have relied on general economic theories or empirical observations in selecting Factors. Benaković and Posedel (2010) emphasize Interest rates, oil prices, and industrial production. Chen, Roll and Ross (1986) use industrial production growth, inflation, bonds spread, NYSE stock market returns, oil prices, interest term structure, and consumption to decompose returns of a portfolio with general securities. Bodurtha, Cho and Senbet (1989) even uses international factors. Most of literatures have focused on applying different factors with a portfolio of many securities, as it is widely known that idiosyncratic risks diversifies away as the number of